When trading stocks on the FOREX markets, traders consider the value of the currency used in other countries. These currencies are weighed against each other to determine their value. Similarly, trading foreign currencies involves weighing a country’s currency against another country’s currency to determine its value. The currencies of many countries are controlled by the government. Also involved in currency control are financial institutions, large businesses and even national governments. People who frequently participate in the Forex market include these folks along with anyone else involved with global currency exchanges.
What sets the FX market apart from the stock market is that transactions are made using currency instead of shares.
Forex markets are connected to the real world by brokers like banks. These banks facilitate trades between at least two different countries and the trader in exchange for a commission. Every trade in the forex markets is a two-country transaction— one alongside the investor, and two with the country being invested in.
What defines the markets in forex?
People involved in the foreign exchange market perform high volumes, large amounts of money exchanges. These folks typically handle cash businesses or trades in liquid assets. Often, they perform both jobs at once. The FX market is significantly larger than any stock market; it’s even larger than many country stock markets combined. FX traders work days and nights to complete their trading every day of the week. They’ll also trade over the weekend if time permits.
You might be surprised at the number of people that are involved in FOREX trading. In the years 2004, almost two trillion dollars was an average daily trading volume. This is a huge number for the number of daily transactions to take place. Think about how much a trillion dollars really is and then times that by two, and this is the money that is changing hands every day!
The FOREX market is not something new, but has been used for over thirty years. With the introduction of computers, and then the internet, the trading on the FOREX market continues to grow as more and more people and businesses alike become aware of the availablily of this trading market. FOREX only accounts for about ten percent of the total trading from country to country, but as the popularity in this market continues to grow so could that number.